By Ruth Mantell, MarketWatch
WASHINGTON (MarketWatch) — Construction on new U.S. homes bounced back in July, led by volatile apartment starts, while starts for single-family home declined, according to government data released Friday.
Construction on new U.S. homes rose 5.9% in July to a seasonally adjusted annual rate of 896,000, the U.S. Department of Commerce estimated Friday.
Starts for buildings with at least five units rose 25.5%, while starts for single-family homes declined 2.2%.
Economists polled by MarketWatch had expected overall housing starts in July to hit an annual rate of 915,000, compared with an originally estimated June starts rate of 836,000. On Friday the government revised June’s starts rate to 846,000.
After the release of the data, U.S. stock futures SPU3 +0.18% were pointing to slight gains following Thursday’s drubbing. See Indications for full pre-market coverage.
The housing-starts report points to an ongoing housing-market recovery — July’s starts were up 20.9% from the same period in the prior year — though there’s concern about the impact of rising mortgage rates on the housing market.
A separate report on home builders released Thursday showed that a gauge of their confidence recently hit the highest level in almost eight years. The shares of many home builders including PulteGroup PHM +5.29% and D.R. Horton DHI +5.69% saw big gains.
There’s certainly room for construction to grow. Starts hit a peak rate of almost 2.3 million in 2006. Economists say about 1.7 million new homes are needed every year to maintain current stock and meet new demand. However, some builders are reporting labor and supply problems, and some are constraining supply to support prices.
Also Friday, the government reported that building permits, a sign of future demand, rose 2.7% in July to an annual rate of 943,000.
Permits for buildings with at least five units increased 13.5%. Meanwhile, permits for single-family homes decreased 1.9%.
